Large crowds ignored the drizzle to pay tribute to the regiment's proud history while also hailing a new future as a battalion. The Royal Scots will merge later this year with the King's Own Scottish Borderers to form The Royal Scots Borderers, 1st Battalion The Royal Regiment of Scotland.

The parade also celebrated the return of active servicemen from an operational tour in some of Iraq's most dangerous hotspots.

Some 400 troops dressed in desert combats, bayonets fixed and drums beating, joined 200 veterans who had travelled from all corners of the country to take part in the farewell ceremony.

The Princess Royal, the Colonel-in-Chief, took the salute from the steps of the Royal Scottish Academy, watching the procession marching with colours flying down Princes Street.

The parade included the Territorial Army and cadets, as well as affiliated regiments such as the Canadian Scottish and Royal Newfoundland Regiments and the Royal Gurkha Rifles.

Leading the veterans' Old and Bold march, Lieutenant-General Sir Robert Richardson, the regiment's former colonel, said the "golden thread" linking the past and more than three centuries of "unrivalled tradition, service and comradeship, courage and loyalty to crown and country" will be preserved through to the future.

"The Jock is second to none and admired throughout the world. One request to my old comrades and those serving today: treasure the past, draw strength from it but do not live in it. The old days are gone, never to return. Embrace the future," the general said.

But despite Sir Robert's encouraging words, a sense of regret and nostalgia dominated the ceremony, as active and retired servicemen felt that centuries of proud traditions and loyal comradeship were being lost forever as The Royal Scots ceased to be an independent regiment.

The Royal Scots, the oldest Regiment of the Line, was formed in 1633 when Sir John Hepburn, under a Royal Warrant given by King Charles I, raised a body of men in Scotland for service in France.

Nicknamed Pontius Pilate's Bodyguard after an argument with the French Regiment of Picardie over who would have guarded Christ's tomb best, The Royal Scots were posted to Tangiers in North Africa, where they won their first Battle Honour. On the regiment's return four years later, the title "The Royal Regiment of Foot" was conferred by Charles II.

Battalions of The Royal Scots have been involved in almost every campaign in which the British Army has fought, from Marlborough's battles in the Napoleonic Wars to the Crimea and South Africa. During the Great War more than 11,000 were killed and more than 40,000 wounded.

After 1945 the regiment continued to serve in many parts of the world, including Germany, Korea, Cyprus, Suez, Aden and Northern Ireland and in 1983 it celebrated 350 years of history, with the Princess Royal being appointed Colonel-in-Chief.

The major defence shake-up which created the Scottish super-regiment was billed by the UK government as a move to modernise Britain's armed forces, but many in the crowd yesterday denounced it as a penny-pinching bonfire of tradition.

Major Steve Simson, who joined The Royal Scots in 1948 at the same time as General Richardson, said he and the unit's former colonel exemplified the deep bonds and sense of family that had been forged within the regiment throughout the years.

Like Major Simson and General Richardson, Danny Malloy and Bill Scally travelled to Edinburgh to meet their comrades and bid farewell to their regiment.

Dressed in the battalion's tartan, Mr Scally, 84, a Normandy veteran, did not march with his comrades but watched the parade as it proceeded from East Market Street to King's Stables Road, where it disbanded.

"I couldn't stay at home. This day was far too special," he said.

Mr Malloy, from West Calder, in Midlothian, said: "It's a very sad day today," as tears rolled down his cheeks.

James Jack, 92, the regiment's oldest member, refused to stay at home, braving the rain in his wheelchair. But his determination to meet his comrades was rewarded when the Princess Royal stopped to talk to him.

The member of the Second Battalion, who had been captured by the Japanese, said: "The Royal Scots was a great regiment and I met some very fine men during my service."

Norman Soutar, a former Royal Scot who served in the first Gulf war, said marching along Princes Street with the regiment for the last time was "a very sad moment".